Pillar Two – Gearing up for future regulations starts today

The Pillar Two rules aim to establish a global minimum corporate income tax rate of 15% for large multinationals. Pillar Two will have a substantial impact on compliance requirements, affecting existing processes and requiring major changes to current (software) solutions. The new rules require companies to calculate whether additional taxes are due. To do this, tax departments need to calculate their income and taxes for Pillar Two purposes. From the market, we see a consensus among tax professionals that there is a need to change regular processes and improve existing ones to incorporate these expansive additional reporting requirements. The reporting requirements are vast and there is a growing need for a structured flow of data with auditable insights.

To help tax professionals get ready for these new regulations, Taxvibes has developed a Pillar Two model that can be used as a standalone solution, in specific software, or it can be built into existing EPM solutions. Taxvibes combines the tax reporting know-how and experience with the skills of Finext consultants to deliver a Pillar Two solution that fits the organization’s need.

The Pillar Two calculations differ compared to the regular GAAP, statutory and tax definitions. Over 120 data points have been identified to make these calculations. Calculations are similar to tax provisioning and require advanced tax accounting knowledge. With the implementation at latest on 31 December 2023, companies need to be ready to make the calculations. This ambitious planning requires tax departments to act quickly and change software systems and start identifying and collecting the necessary data within the organization. With the rapidly approaching deadline, many EPM software companies have also developed their own Pillar Two solutions to help organizations with these rigorous changes. One of them is CCH Tagetik. The solution has been designed as an out-of-the-box Pillar Two module that can be implemented on a standalone basis or within an existing CCH Tagetik EPM solution.

CCH Tagetik is a software vendor that has been operating mainly in the finance domain, but the last few years we see them working within the tax domain more and more. Backed with tax knowledge from shareholder Wolters Kluwer. With applications ranging from Transfer Pricing, Country-by-Country reporting or Tax Provisioning, among others, it was only a matter of time before the company added a Pillar Two module to their platform. The module is currently in the final stages of the design, with only a handful of tax professionals having seen the module in action before the grand reveal which is scheduled to happen in May 2023 at the global CCH Tagetik conference in Lucca, Italy. While we have had the opportunity to have a sneak-peek at the software, we intend to share more details on the upcoming launch, as we are also present at the conference in Lucca.

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